Replacement of the Herbert G. “Buddy” Phillips Bridge in Jacksonville may be slowed by the contractor filing bankruptcy, but work will not stop, state transportation officials said Tuesday.

Intercoastal Contracting, Inc., which formerly did business as Intercoastal Diving, Inc., filed for Chapter 11 in N.C. Eastern Bankruptcy Court on Aug. 29.

The Castle Hayne-based company was awarded in 2010 a contract by the N.C. Transportation Department for $11.8 million to construct the Buddy Phillips, which spans the New River on Marine Boulevard as part of Business U.S. 17.

The state requires contractors to be bonded to ensure projects are completed, and as a precaution, the NCDOT decided to involve the bonding company to ensure the project is finished on time, said David Candela, resident engineer with the NCDOT in Jacksonville.

“We’re working out how to proceed on the project with bonding company,” Candela said. “How we get there will be decided in the next few weeks.”

This summer, Intercoastal Diving lost a $2.6 million lawsuit to a Carolina Beach homeowners association for faulty work done to a bulkhead in 2007 that caused damage to the HOA’s shoreline. The jury verdict came after two years of legal wranglings and a three-week trial in New Hanover County, according to The Star News of Wilmington.

Employees at the company declined to speak on the record. The company’s attorney, James Oliver Carter, of Carter & Carter in Wilmington, did not return detailed messages.

The company listed between $1 million and $10 million in assets, and between $1 million and $10 million in liabilities, according to court documents. Chapter 11 filings typically allow a company to reorganize debts.

The company’s creditors include more than $2.3 million in job bonds to Liberty Mutual and more than $990,000 to SunTrust Bank, according to court documents.

The company faces a contract penalty if the job isn’t done by July 2013, Candela said.

“There won’t be any extension,” he said. “Plus work was way ahead of schedule so I don’t see a problem with it getting done.”

Candela said the project was roughly 90 percent complete with mostly road work on either side of the bridge needing done.

Two lanes of traffic are flowing on the new bridge while the old bridge has been demolished and used to create the first inland artificial reef in Onslow County.

Built in the New River at a 30-acre site between Spring Point and Town Point, the reef provides a home and hunting grounds for countless aquatic species and will attract anglers to the area, according to information provided by Riverworks at Sturgeon City, a partner in the reef grant project.

Construction of the new bridge had to be planned around an in-water work moratorium set in place by the U.S. Army Corps of Engineers and the N.C. Division of Water Quality. Vibrations caused by the placing of the piles that support the bridge had the potential to disrupt the migration patterns of certain fish. North Carolina is home to numerous species of fish that spend most of their lives in saltwater but return to fresh water to spawn. The New River is a pathway for several species of these fish — including striped bass, shad, alewife and sturgeon — that travel hundreds of miles upstream to spawn, according to the U.S. Fish and Wildlife Service.

Page 2 of 2 - The new bridge is replacing a 67-year-old bridge that has been labeled one of worst in the state by AAA Carolinas.

Until it’s complete, motorists using the bridge need to watch signs for changing traffic information, stay alert and obey posted speed limits, according to the NCDOT.

For real-time travel information at any time, call 511, visit ncdot.gov/travel or follow NCDOT on Twitter at ncdot.gov/travel/twitter. Another option is NCDOT Mobile at “m.ncdot.gov,” a smartphone-friendly version of the NCDOT website.

Contact Daily News Senior Reporter Lindell Kay at 910-219-8455 or lindell.kay@jdnews.com. Follow him on Twitter and friend him on Facebook @ 1lindell.